Manila's Bloomberry looks to Singapore to rev up gaming fortunes
MANILA, March 31
MANILA, March 31 (Reuters) - Bloomberry Resorts Corp hopes to recreate the magic of Singapore's Marina Bay Sands with the expansion of its $1.2 billion Solaire casino-resort in Manila, a crucial project if the firm is to reverse its disappointing first-year results.
Solaire is the first of four planned integrated resorts expected to rise in Manila Bay's new Entertainment City gaming precinct, a massive development designed to give wealthy Asian gamblers an alternative to the Chinese casino city of Macau.
Solaire's first phase opened in March last year, and as work on the $500 million expansion gets into full swing Bloomberry is looking to Marina Bay Sands for inspiration. With its triple towers, boat-shaped observation deck and infinity pool in the sky, Marina Bay Sands is more than just the world's most profitable casino - it is an emblem of Southeast Asian gaming glamour.
Solaire will struggle to match the $5.9 billion Marina Bay Sands in terms of glitz, even though it already boasts spectacular views of Manila Bay and the expansion will see the opening of the country's first Lyric theatre that can stage big musicals.
But Bloomberry's billionaire owner Enrique Razon, the Philippines' fourth-richest person, has managed to grab a bit of the Singapore casino's executive nous in the form of ex-Marina Bay Sands CEO Thomas Arasi.
The American left Las Vegas Sands Corp-owned Marina Bay Sands in early 2011 citing personal reasons, after 18 months with the company.
Razon convinced Arasi to come back to Asia from the United States to become Bloomberry president and COO in October, hoping to tap some of the secrets of Marina Bay's success.
Five months later, Solaire has seven fixed-room junkets and over 40 casual junket operators who fly in players, against nearly zero junkets under the previous management of Las Vegas-based Global Gaming Philippines (GGAM).
That is apart from individual high-rollers from China, Taiwan, South Korea, Japan and Southeast Asia, who fill Solaire's VIP gaming sections.
Arasi believes Solaire is already on the right path in terms of its clientele, having achieved in its first year the sought-after balance of high roller VIPs and mass-market gamblers.
"We are close to ideal because we have a nice variety of junkets that are currently calling Solaire home," he told Reuters in an interview at Solaire's Bay Tower hotel overlooking Manila Bay.
"Based on our current space constraints in our VIP areas, we don't have too much more room to bring in others. So that's a high-class problem to have."
He said the Philippines had certain advantages over Singapore for casino operators which should serve Solaire well, citing lower taxes and high-quality local staff.
Casino operators also enjoy higher margins in the Philippines because Manila allows junkets - middlemen who charge casinos commissions to bring in wealthy gamblers.
Solaire's expansion is likely to open towards the end of the year, boosting Solaire's VIP gaming area by 70 percent.
But for the market, Bloomberry's inability to make its current assets profitable outweighs any anticipated jump in gaming revenue, after the company posted losses amounting to around $19 million in its first nine months.
"I'm not factoring in the expansion," said Rizal Commercial Banking Corp's Vittorio Gomez, who helps oversee trust funds partly invested in gaming.
"They haven't even fully maximised the existing space, they are only starting to maximise the space."
Investors who were disappointed by Solaire's weak earnings and a bitter shareholder battle involving GGAM have started to buy Bloomberry shares again after they fell 35 percent last year.
The stock is up about 13 percent this year, the only integrated casino resort-related stock to post gains in the Philippine stock market over the period.
Bloomberry is expected to post its first net profit this year of 3.2 billion pesos.
Arasi said the opening later this year of Melco Crown Entertainment Ltd's more than $1 billion City of Dreams integrated resort - Asia's sole new casino development in 2014 - would lift the profile of Entertainment City.
"They are another competitor; they are also just as much a saviour," Arasi said.
"When (City of Dreams) opens you're going to have twice as much marketing going on to this location. You're going to have the centre of gravity starting to really shift down here" from the Makati financial and commercial centre in Manila.
($1 = 44.845 Philippine Pesos) (Editing by Stephen Coates)